ISBN 1-85765-833-7

Executive Summary

Table of Contents

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EXECUTIVE SUMMARY

Since 1993, there has been a significant shift in the manner in which UK businesses fund themselves, which includes a healthier trend towards firms matching their funding to their underlying business assets.
Key Note estimates that by the end of 1999 the relevant sales of members of the Factors & Discounters Association (FDA) will reach £14.8bn and the overall market, including non-members, will exceed £17bn, an increase of nearly 9 percent over the figure estimated for 1998.
Over the period 1999 to 2004, Key Note forecasts total sales for factoring and invoice discounting at current prices will increase at an average rate of nearly 15 percent per annum to reach almost £110bn. Business for factoring alone is predicted to increase at just over 11 percent per annum, but the share of total business taken by this form of finance will continue to decline. Against this, invoice discounting volume is likely to increase by almost 16 percent per annum and its share of total business will grow from 71.4 percent to 73.4 percent. Over the same period to 2004, international business will increase significantly.
The volumes of Commercial and Consumer Lending in the UK, measured by amounts outstanding at the end of 1998, reached almost £835bn; an increase at current prices of slightly more than a third against the 1994 figure. Using arrears figures from the Finance and Leasing Association as a guide, at least 3 percent of this -- some £25bn -- could become overdue within 12 months.
Debt management in the UK is, at the moment, subject to a number of new regulations. The Late Payment of Commercial Debts (Interest) Act became effective in 1998 to focus attention on poor payment practices. As a follow up to this, the Better Payment Practices Group (BPPG) is expected to raise awareness of the need for improvements in credit management practices.
For consumers, the pace of legislation offering better protection is also quickening. New proposals have been tabled to further overhaul banking and insurance services and more aptly meet the needs of those on low and volatile incomes. A new White Paper entitled `Modern Markets -- Confident Customers' has been issued, aimed at promoting open and competitive markets, and encouraging responsible businesses to follow good practices. To help monitor such new ideas, the Office of Fair Trading (OFT) is being given new opportunities to develop its role as consumer watchdog.

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

DEFINITIONS

BAD DEBTS AND COLLECTIONS

RECOURSE AND NON-RECOURSE FACTORING

INVOICE DISCOUNTING

INTERNATIONAL FACTORING AND DISCOUNTING

DEBT MANAGEMENT

MEASURABLE LENDING IN THE UK

LATE PAYMENT OF COMMERCIAL DEBTS (INTEREST) ACT

MARKET TRENDS

Table 1: Categories of Measurable Lending in the UK, 1998

Table 2: UK and Republic of Ireland Factoring and Discounting Industry by Turnover by Type of Business ( percent),1993-1998

Table 3: Factors & Discounters Association Members' Clients by Turnover (£m), 1998Å

Table 4: Factors & Discounters Association Members' by Type of Business, 1998Å

Table 5: Factors & Discounters Association Results Covering the UK and the Republic of Ireland (Index 1998=100), First 6 Months 1998 and 1999

Table 6: UK Commercial and Consumer Lending Index by Total Value of Loans Outstanding at Each Year End (Index 1994=100), 1994-1998

Market Size

THE FACTORING AND DISCOUNT MARKET

THE TOTAL UK MARKET

DEBT MANAGEMENT

PAYMENT AND COLLECTION

BUSINESS FAILURES

Table 7: Total UK and International Factoring and Discounting Business of UK Companies by Value (£m) and Number of Clients, 1994-1999

Table 8: Total UK Export and Import Factoring Business by Volume (£m), 1994-1998

Table 9: Factoring Volumes (£m), First Quarter 1999

Table 10: Top Five Factoring Countries By Volume ( percent), 1997

Table 11: Estimated UK Market for Factoring and Discounting by Volume (£m), 1994-1999

Table 12: Bank Lending to Small Businesses (£bn), December 1993-1998

Table 13: Bank Market Shares of Small Firm Customers ( percent), March 1997, March 1998 and April 1999

Table 14: Sources of External Finance for Small and Medium Enterprises ( percent), 1987-1990 and 1995-1997

Table 15: Sources of External Funding for European Small and Medium Enterprises ( percent), 1998

Table 16: The Number of UK Companies Citing Cashflow, Payments or Debtors as Their Most Important Problem ( percent), 1st Quarter 1998 to 3rd Quarter 1999

Table 17: Average Days Paid Beyond Due Date for UK Customers by Industry Sector, January/March 1998 to January/March 1999

Table 18: Average Days Paid Beyond Due Date for UK Customers by Company Size (£m), April/June 1998 to January/March 1999

Table 19: Volumes of Commercial and Consumer Lending by Banks and Building Societies by Outstanding Debts (£bn), 1994-1998

Table 20: UK Leasing and Hire Purchase Business (£m), 1994-1998

Table 21: Asset Finance Business by Asset Type (£m), 1994-1998

Table 22: Consumer Credit Lending in the UK by Amounts Outstanding (£bn), 1994-1998

Table 23: Limited Company Liquidations and Business Bankruptcies in the UK by Number, 1994-1998

Table 24: Insolvencies Among Individuals in the UK by Number, 1993 to 1997

Industry Background

FACTORING AND INVOICE DISCOUNTING

DEBT MANAGEMENT

DEBT COLLECTION

Competitor Analysis

THE MARKETPLACE

MARKET TRENDS

LEADING FACTORS AND INVOICE DISCOUNTING

LEADING DEBT COLLECTING AGENCIES

ADVERTISING AND PROMOTION

Table 25: UK Consumer Finance Statistics (£m), September 1998 to September 1999

Table 26: Main Media Advertising Expenditure by UK Factoring and Discounting Companies (£000), Year to December 1994-1998

Strengths, Weaknesses, Opportunities and Threats (SWOT)

FACTORING AND DISCOUNTING

DEBT MANAGEMENT

Buying Behaviour

INTRODUCTION

LATE PAYMENT

Table 27: Excuses for Late Payment by Companies Offering Excuses ( percent), 1999

Table 28: Composition of UK Consumer Credit in Real Terms (£bn)Å, 1987-1997

Table 29: Personal Expenditure Financed by Credit by Social Class ( percent), 1997-1998

Table 30: Use of Different Forms of Credit by UK Adults ( percent),1993-1998

Table 31: Ownership of Retailer Store Cards by UK Adults, 1995-1998

Table 32: UK Adults Using Home Collected Credit (000 and percent), 1998

Outside Suppliers to the Industry

INTRODUCTION

CREDIT REFERENCES

CREDIT REFERENCE AND DATABASE COMPANIES

CREDIT SCORING

CREDIT MANAGEMENT RESEARCH

DATA PROTECTION

EUROPEAN BUSINESS SURVEY

Current Issues

CLOSE BROTHERS

CITY INVOICE FINANCE

MODERN MARKETS - CONFIDENT CONSUMERS

THE SINGLE EUROPEAN CURRENCY

BETTER PAYMENT PRACTICE GROUP

Forecasts

INTRODUCTION

ECONOMIC AND FINANCIAL OUTLOOK

FACTORING AND INVOICE DISCOUNTING

DEBT MANAGEMENT

Table 33: Factors & Discounters Association Results for the Half-Year Ended 30th June 1999

Table 34: Forecast UK Market for Factoring and Discounting by Volume (£m at Current Prices), 1999-2004

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HOPPENSTEDT BONNIER INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

Text © 1999 Key Note

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